Personal Insolvency Increases Due to Christmas

A new report conducted from research by GfK NOP on behalf of R3 has shown that almost 4 million Brits have gone into debt as a result of their overspending over the festive period.  The report has also shown that around 6.5 million are now panicking that they will not have the finances immediately available to cover their expenditure in January.

The study has also revealed that around 8% of the people survey, designed to give a good representation of Britain as a whole, had borrowed money from various sources in order to cover the cost of Christmas.  Another slightly more alarming fact showed that nearly 3 million Brits, approximately 6% of the population are still struggling financially due to debts that accumulated last Christmas.

According to the research, the main reasons behind the excessive spending are apparently guilt and peer pressure as people worry about meeting what they believe to be the expectations of friends and family.  Around a third if British people admit to feeling a sense of guilt about failing to live up to the standards they feel are being set.

Consumers struggling due to Christmas have been encouraged to seek impartial debt advice by Insolvency Director Derek Oakley at Debt Free Direct. He has said,
"Christmas can be a difficult financial time for consumers, especially those already struggling with debt. In turn, the added financial pressure of the festive season may lead to an increased number of Insolvencies in January."  Mr Oakley also added,
"Many consumers may not be aware of the debt solutions available to them. When seeking help, it is vital that consumers should get advice that is based on their individual circumstances."

2009 saw a record number of personal insolvency cases in the UK, with the figure likely to increase again this year as people try and overcome the financial constraints they have gotten into over the Christmas period as well as the likelihood of similar things happening next Christmas.  

Consumers currently struggling are being encouraged to assess their current expenditure and devise a reasonable and realistic budget for the coming months and if that is not posible seek further advice from a debt management company.

Posted at 09:00AM Jan 31, 2010 by Kris Wigfield in Advice on Insolvency  |  Comments[0]

House Prices Begin Year on a Positive Note

According to the Nationwide Building Society, the rate of house price increases could soon hit 10% after another rise in January.

A survey has shown that the average UK house price rose by 1.2% in January, which has driven the annual rate up to 8.6%.  This increase now means that the average UK home is worth £163,481.

Also, a Land Registry survey has said that the annual change in property prices has shown an increase for the first time since May 2008.  This came after figures showed the year-on-year December rise was 2.5%, this was the eighth consecutive monthly rise.

Consecutive rises

The Nationwide has also said that prices are now growing at their fastest rate since 2007, and also that they have consecutively risen for 9 months now.

"House prices strengthened their upward momentum at the start of 2010, increasing by a seasonally adjusted 1.2% month-on-month in January," said Martin Gahbauer, the Nationwide's chief economist.

"Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007," he added.

Regarded to be a less volatile measure on house prices, the three-month on three-month rate showed a slight decrease in January.  The rate was recorded at 2.1%, down from 2.3% in December.  

Posted at 09:00AM Jan 30, 2010 by Kris Wigfield in Mortgages & Housing Market  |  Comments[0]

House prices could rise by 10% a year, Nationwide says

The rate of house price increases could soon rise above 10% a year, the Nationwide building society has said.

Its latest survey shows that the average UK house price rose by 1.2% in January, pushing the annual rate up to 8.6%.  The average UK home now costs £163,481.

Separately, the Land Registry survey revealed that the annual change in property prices showed a rise for the first time since May 2008.

It said that the year-on-year increase was 2.5% in December, following an eighth consecutive monthly rise.

Consecutive rises

The Nationwide said prices had now been rising for nine months in a row, and the rate of increase was the fastest since October 2007.

"House prices strengthened their upward momentum at the start of 2010, increasing by a seasonally adjusted 1.2% month-on-month in January," said Martin Gahbauer, the Nationwide's chief economist.

"Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007," he added.

The three-month on three-month rate, regarded as a less volatile measure of house prices, saw prices rise by 2.1% in January, down slightly from 2.3% in December.

Posted at 08:57PM Jan 29, 2010 by Kelly Board in UK Economy News  |  Comments[0]

Ford Finally Turns a Profit

American car giant Ford has finally made an annual profit in 2009 after 4 years of constant decline.  Figures have reported a $2.7bn (£1.7bn) profit for the year, which is a vast improvement on the previous year when they reported a $15bn loss.  Ford have also said that they expect 2010 to be another positive profitable year.

The final quarter of 2009 showed a substantial $868m profit, which gives a good indicator as to how well the year has gone when compared to 2008s report of a $6bn loss.  The improvement has been part due to the company cutting costs and reducing debt levels.

The number of people in the US employed by Ford fell by 9000 through the year due to buyouts and layoffs, after the need for cost cutting was clearly highlighted by a large fall in overall revenue for the year.  The figure of $118.3bn was $19.8bn down on 2008s figures.

Challenges Ahead

Analysts have also said that Ford are benefitting from goodwill for avoiding bankruptcy, unlike their big ‘Detroit Three’ rivals General Motors and Chrysler.  Both GM and Chrysler took billions of dollars worth of state aid and went into bankruptcy protection last summer.

“While we still face significant challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth," said Ford president and chief executive Alan Mulally.

The automotive market in general struggled throughout 2009 due to a fall in sales during the downturn.  This resulted in many governments introducing scrappage schemes that gave motorists with old cars a cash incentive to trade it in for a newer model.

Posted at 02:27PM Jan 29, 2010 by Kris Wigfield in UK Economy News  |  Comments[0]

Mortgage approvals 'on the rise'

The number of mortgages approved for house purchases rose at the end of last year, according to figures from the major UK banks. 

Some 45,897 home loans were approved for house purchases last month, double that of December 2008.  However, the total number approved in 2009 was still 27% lower than 2008, and the lowest since records started in 1997.

Stamp duty

Gross mortgage lending by the High Street banks also rose, from £9.6bn in November to £10.2bn in December. This was 12.5% higher than December 2008, and was boosted - according to the British Bankers' Association (BBA) - by borrowers bringing loans forward before the stamp duty holiday came to an end.

The temporary stamp duty holiday on properties worth between £125,000 and £175,000 ended on 1 January 2010 so buyers will again have to pay 1% tax on the value of homes worth more than £125,000.

"Historically, we would see a drop off in mortgage purchases in December, but with the stamp duty holiday expiring at the end of the year, this has led inevitably to a lot of rushed-through house purchases," said Brian Murphy, head of lending at mortgage brokers Mortgage Advice Bureau.

"What we are likely to see in January and February is an unusually large drop off in mortgage purchases, because sales which would normally have been concluded in the first two months of this year have been pushed through in December."

According to the BBA, the level of those remortgaging remained low in December - at 23,480 - as people continued to choose to move to their lender's standard variable rate (SVR), rather than move to a new fixed-rate deal when their term came to an end.

It remains to be seen whether this trend will continue after a recent move by Skipton Building Society to raise its SVR sharply, and whether this will produce any possible response by other lenders.

Posted at 08:53PM Jan 28, 2010 by Kelly Board in UK Economy News  |  Comments[0]

H&M Profits climb by 21% due to large expansion

Swedish clothing retailer Hennes & Mauritz (H&M) has announced that their profits have risen by a huge 21% in their final quarter of 2009 to 30 November.  This has been due to the opening of 250 new stores throughout the year, 25 more than originally envisaged.

Those 3 months saw profits hit 6.2 billion kroner (£524m), an increase from 5.1 billion the previous year.  This was in spite of the fact that like-for-like sales fell by 6% in the period.

A statement from H&M representative said that the weak sales figures were due to a ‘mild autumn’ that they claim affected the sales of key products at that time such as coats and heavy knitwear.  They have also stated that they are positive about the coming year with further expansion planned with 240 more stores being opened, taking the total number to around 2230 stores worldwide.

More good news for the company came in the fact that overall net profit for the year was up by 7% as well as pre tax sales also rising by 15% to 16.4 billion kroner.

Further plans for the new year include entering the Israeli market with plans in place to open outlets in Tel Aviv, Jerusalem and Haifa.

Posted at 03:26PM Jan 28, 2010 by Kris Wigfield in UK Economy News  |  Comments[0]

Crystal Palace Latest

Following on from yesterday's article:-

Finance7 understands that the debt owed to HMRC equates to approximately 5% of the total club debt.  Exact figures cannot be provided until Creditors submit a Proof of Debt form to the Administrators.

On the face of it this would suggest that HMRC will hold little sway when it comes to an eventual vote on a CVA proposal.  However, their share of the vote is likely to be far higher than the aforementioned 5% because some of the reported £30 million relates to football related debts and they will be paid in full under Football League rules and will therefore not be part of the vote.  Furthermore, it is usually the case that certain Creditors will simply not bother to vote, this will again increase the weight of the HMRC vote.

In addition, other Creditors could also vote against any CVA proposal.

The Administrators will be hoping that there are many interested parties resulting in a bidding war.  The more money that is received, the higher the dividend to Creditors and the more likely they will be to accept the CVA proposal.

Posted at 09:22AM Jan 28, 2010 by Kris Wigfield in Finance7 Company News  |  Comments[0]

Pound falls after weak GDP growth figures

The pound has fallen against the dollar and the euro after disappointing figures showed the UK economy grew just 0.1% in the last three months of 2009.

Although the figures confirmed the UK's exit from an 18-month long recession, analysts had hoped for stronger growth.

The pound dropped a cent, or 0.6%, against the dollar, to $1.614. Against the euro, it slipped to 1.146 euros.

The Office for National Statistics figures also showed that GDP fell by a record 4.8% in 2009.

The UK is the last major economy to exit recession. France and Germany both began growing again between April and June last year, while the US and Japan also emerged from recession last year.

The preliminary GDP estimate could be revised down, or up, in the coming months.

Posted at 09:03PM Jan 27, 2010 by Kelly Board in UK Economy News  |  Comments[0]

Insolvency In Football

British football clubs are continuing to struggle financially despite the UK finally leaving recession, with Crystal Palace the latest club to bite the bullet and enter Administration. 

Palace follow in the footsteps of clubs such as Leeds United, Bradford City and Luton Town.  Debts totalling £30 million and severe cash flow problems have resulted in players not being paid twice in the last few months.  Lacks of investment propositions and severe creditor pressure from HM Revenue & Customs and the Landlord of Selhurst Park have finally pushed the club over the edge. 

Football league rules state that any club entering Administration will receive a 10 point deduction and also state that a minimum further 15 point penalty will be incurred if the club do not exit Administration via a Company Voluntary Arrangement (“CVA”).   

In order for a Company to enter a CVA, 75% of voting Creditors must agree to the proposal.  However, the Football League insists that all football related debts should have “Super Preferential status” meaning that they get paid before other Creditors.  

Despite the football creditors rule appearing to contradict insolvency laws, when legally contested in Inland Revenue Commissioners v Wimbledon FC in 2004, they lost the case and the ruling continues to operate.   As a result, HMRC have insisted that they will vote against any CVA proposal where football related debts have been settled ahead of their claim.

What does this mean for Crystal Palace?

Despite certain sections of the press claiming that Crystal Palace should be deducted more than 10 points due to the fact they also entered Administration just 10 years ago, this is unlikely to happen.  Crystal Palace will almost certainly be deducted the mandatory 10 points.

However, if the debt outstanding to HMRC equates to more than 25% of the Creditor vote that is unlikely to be the end of the matter.  HMRC will most likely reject any CVA proposal that falls short of paying the Creditors 100p in the £ (which it surely will).  Should any CVA proposal be rejected Crystal Palace will receive a further point deduction of at least 15 points under Football League rules.  The further points deduction could take place either this season or next season depending on the timing of the CVA proposal and the discretion of The Football League.

Therefore, the information that will be crucial is what percentage of the total clubs debt is represented by HMRC?  Of course it should also be remembered that Creditors other than HMRC could also reject any CVA proposal.  No doubt the Administrators will make an announcement soon

Posted at 04:59PM Jan 27, 2010 by Kris Wigfield in Finance7 Company News  |  Comments[0]

Crystal Palace enter Administration

Football League Championship play-off hopefuls Crystal Palace have revealed that they have slipped into Administration following a season blighted by financial problems with debts now reported to be up to around £30 million.

Under Football League rules, the administration will result in a 10 point deduction that will see Palace plummet down the league table, dropping 11 places to 20th. Sheffield based insolvency company The P & A Partnership have been appointed as Administrators on the case.

Chairman Simon Jordan has been looking for new investors in the club following his announcement last year that he is looking to sell due to the rising debt. Officials from the club are also due in court on Wednesday to face a winding-up order from HM Revenue and Customs.

The Palace players will now no doubt be anxious about their futures after already being paid late on a number of occasions over the past few months after being told by Jordan that he had ‘cash flow’ problems in November.

The clubs financial woes had been somewhat masked by a mini revival from the team, the Eagles were just two points outside the play-off position heading into Wednesday night’s game with league pace setters Newcastle United, however that game now promises to be far tougher than previous expected as Palace will now enter the relegation dogfight.

"The lads are obviously all terribly disappointed and the Newcastle game will be one of the toughest they have ever played, but I can promise the supporters who are coming that we will be focused on the match," the manager Neil Warnock told the Croydon Advertiser.

Further problems for the team will come from the almost inevitable sale of prize assets such as teenage striker Victor Moses, whilst this will bolster to clubs finances as they try to get out of Administration, it may cause more on the field problems as the team weakens.

"Our role is to find a buyer quickly to provide certainty for the future," said Administrator Brendan Guilfoyle of P & A. “This club has been in the spotlight with creditors pressing for payments and players anxious about wages. We are hoping our appointment will be short-lived as we understand there are many interested buyers."

As it stands, the club sit ninth in the league as the 10 point deduction will not take effect until the football league is formally informed. This will be expected to take place over the coming days.

Posted at 03:22PM Jan 27, 2010 by Kris Wigfield in Finance7 Company News  |  Comments[0]

Adams Childrenswear falls into administration for the third time in three years.

MCR partner Paul Clark said: "Like many retailers, it has experienced a difficult trading environment during the course of the past 12 months which has been exacerbated by a further downturn and general tightening of the credit markets."

The last restructuring  reduced the number of stores from 271 to 125, but it has continued to struggle despite a number of prominent contracts with leading UK retailers.

Businessman Paul Shannon bought the business in 2009 and rescued it from administration again last year, before selling it on to the Pakistani firm Habib Alvi. Since then, it has been dogged by reports of falling sales and delayed payments to suppliers.

Posted at 07:58PM Jan 26, 2010 by Kelly Board in UK Economy News  |  Comments[0]

E-Clear founder to face freezing order

BDO, the accountants appointed to run the administration of E-Clear, will meet with creditors and stakeholders in E-Clear, including representatives of Globespan, Sunwing, the Serious Fraud Office (SFO) and the Civil Aviation Authority (CAA).

The meeting is likely to ask creditors if they will fund a further investigation into the collapse of E-Clear in order to find out where the cash has gone, reports The Independent.

A high court hearing last week revealed that E-Clear had spent as much as £100m. This left less than £100,000, which is insufficient to pay for the cost of an investigation into the collapse.

Globespan says it is owed as much as £35m by E-Clear, while Sunwing, a Canadian tour operator, is thought to be owed a similar amount.

Creditors are believed to be concerned that Elia could flee to his native Cyprus in the coming weeks, adding to the confusion about the company’s assets. The administrator does not have the power to seize his passport.

Sources close to E-Clear’s administration process told The Independent that they are “staggered by the complexity of the company’s dealings”. Computers and staff records are also thought to be missing.

The SFO is thought to be poised to mount an investigation into the goings-on at E-Clear and the collapse of Globespan.

Posted at 07:46PM Jan 25, 2010 by Kelly Board in UK Economy News  |  Comments[0]

Fraud losses 'cost the UK £30bn a year'

The National Fraud Authority (NFA) has announced that fraud costs the UK £30bn a year, which equates to £621 per adult in the UK.

It said the losses were paid for through taxes and rising prices of products and services.

The highest sector was losses from tax fraud at an estimated £15.2bn.  31% of losses come from the private sector, with the financial services sector suffering the biggest hit.It lost an estimated £3.8bn, including £1bn in mortgage fraud. This has prompted the City watchdog, the Financial Services Authority, to take a tougher stance against the crime, with a number of brokers having been fined and banned from the industry.

Another £2bn was lost to insurance fraud, while the remainder came from fraudsters targeting online banking, cheques, and plastic cards.

The consumer goods industry lost an estimated £1.3bn a year. Manufacturing suffered losses of £1bn a year, and technology, media and telecommunications lost £948m.

Consumers have also been tricked out of an estimated £3.5bn a year in share, lottery and loan scams. Some 12% of all fraud was suffered by individual consumers.

Prevention

Previous estimates had suggested the total fraud level was much lower, with one report by senior police officers in 2007 saying that the figure was about £13bn.

"Although the figure appears on the face of it far greater than the previous estimate, we know this is because we have included many additional figures that other studies have not," said NFA chief executive Bernard Herdan.

"With this vital information, we can develop clearer priorities to prevent, detect and deter fraudsters. We will use the data to help identify those areas of fraud that cause the most harm to the UK economy.

"Reducing the cost of fraud is important but, even more significantly, I want to stop more people from becoming victims. I have seen first-hand the devastating effects fraud can have. It destroys lives and livelihoods."

Consumers are being encouraged to take preventative measures to avoid becoming the victims of mass-marketing scams.Advice line Consumer Direct suggested that taking time over any deal would help, but anything that appeared too good to be true, usually was.

If ordering on the internet, consumers should follow basic security measures, such as taking care when offering bank details.

Posted at 08:55PM Jan 22, 2010 by Kelly Board in UK Economy News  |  Comments[0]

Jessops liquidation plan approved

Shareholders in the former camera retailer Jessops have voted to voluntarily wind down the company.

The firm has already sold its 213 shops to private group Snap Equity and they will not be affected by this decision.

Jessops shareholders will receive 9.7p for every 100 shares they own. KPMG has been appointed as the liquidator.

The firm was forced to restructure in September last year as debts rose and it faced increasing competition from supermarkets and internet retailers.

Jessops plc will be delisted from the stock exchange on 22nd January. Shares have already been suspended.

Snap Equity now owns Jessops Group, which contains all the company's assets including its shops and stock.

It is the firm's old parent company, Jessops plc, which is now set to be wound up.

New owners

Jessops' biggest creditor, HSBC, owns 47% of the new company, with 33% owned by the pension trustees and 20% by an employee trust.

HSBC has given the new company a £54m loan to pay the debts of the old Jessops, but is waiving £34m of this in return for its stake. Jessops has said the restructuring will secure about 2,000 jobs and the High Street shops will remain.

Posted at 08:07PM Jan 21, 2010 by Kelly Board in UK Economy News  |  Comments[0]

Portsmouth FC fail to block winding-up petition

Portsmouth FC has failed to block a winding-up petition from HM Revenue & Customs at the High Court.

HMRC had applied for the petition against Portsmouth on 23 December but the club argued the VAT part of its tax bill was too high.

The High Court judge dismissed Portsmouth's claim and the hearing is expected to go ahead on 10 February, however he said the issues involved in the case were "difficult" and granted the club permission to appeal his ruling. If this were to go against them, it would push Portsmouth a step closer to administration.

However, a statement from Portsmouth said the judge "considered that any appeal to the Court of Appeal would have a 'real chance of success'".

If it were to succeed, the club said, "this would result in the judge's ruling being reversed and HMRC's petition being struck out, without the petition proceeding to the final hearing".

Portsmouth now has seven days to lodge at appeal and if the club were to go into administration, it would face an automatic nine-point deduction

Posted at 07:18PM Jan 20, 2010 by Kelly Board in UK Economy News  |  Comments[0]